tv Carnegie Endowment Forum Explores Impact of Corruption in American Life CSPAN June 27, 2017 3:18am-4:51am EDT
would reduce the federal deficit over a 10 year period by $321 billion, but the measure what increase the people not in short by 2026 by 22 million. as they debate the bill, live coverage this week on c-span 2, online at www.c-span.org, and on the free c-span radio app. now, a look at government corruption around the world. you will hear about corruption in honduras, and among developing countries. the discussion also includes the potential effects of corruption in the u.s.. the carnegie endowment for international peace hosted.
>> i will be monitoring this conversation and you will have a chance to ask questions. first, a senior fellow here at the carnegie endowment for international peace. she is the author of this report, "when corruption is an operating system." she's using honduras as the case study. to add to the conversation, we have the author of "corruption in america." she is also an attorney in the loss of filed against president trump. so, corruption as an operating system. what does that mean? >> yeah, what am i talking about? >> exactly.
>> so, would you mind -- we have a picture. fundamentally what i am talking about here is not corruption as that some practices members of government indulge in, in some countries a lot of government officials might indulge in this, but you know, the way we normally think about it is sort of like -- i don't know, like a disease that creeps in and infects the tissues of government. int i've been seeing honduras turned that to be a really clear example of it. network, anding a a network that crosses asndaries that we think of separating different sectors of activities, like the public and private sector, right?
americans love to fight about which one, the public or private sector is more pernicious, or worse for your help. and let alone, the criminal secretary is famous for criminal activity. so, what becomes clear as you look carefully is that you have got a network that is made u p of people at the top of the public sector, the private sector, and the criminal sector and often, they overlap, or they share competences, or they have a cut out, like a representative that they will you know, one brother will be in the public sector and the other will be running a drug cartel. so, you span these different sectors. that's what this picture is supposed to evoke in people's mind.
i will say that later. david, if you would not mind giving me the next one. does try tophic break it down for you. so, the public sector, members of the network, have a responsibility and that is, to distort state agencies are institutions, budgets of government if you will, to serve the purposes of the network, as opposed to serving their stated purpose, which is the public good. exactly. through allg to go of them, but what this report pickand shows is you just them apart a little bit. there are a couple of examples i honduras, but one of them is the justice sector. because there's a bargain that hold these networks together and it's that money flows upward in
the network, and impunity flows downward. there's a deal. for the part of the take you are kicking up words, you are guaranteed protection from legal repercussions. that can take a lot of forms in different countries. in honduras it is particularly egregious. you had a midnight firing of four of the five justices of the supreme court. this happened a a number of years ago, but it can be the actual judges. it can be by capturing public prosecution. in some countries, i have a seat in honduras, in some countries where it's difficult to capture the justice sector, the network figures out how to work around it. where judges retain quite a bit of independence, the president has been focusing really hard on expanding the jurisdiction of the military court.
so that more and more cases can bypass the relatively independent civil systems and be funneled through the much more controllable military system. then, the next thing -- the colors on this infographic are bleue for government, green for private sector, and red for the criminal sector. because that is for the bad guys. anyway, we looked at the private sector, and it's not, sometimes this can look like the entire system and you sort of say who is corrupt? everyone is corrupt. but it actually makes some sense to try to drill down and look at, what are the specific revenue streams that are being captured by the network? so, some of it goes back to the public sector and his public procurement. that's another way that these networks, and in honduras in
particular, infrastructure. big infrastructure projects like roadbuilding, ports, things like that. you will see construction companies, but the banking sector is a classic. in this case, it turns out the network or network affiliated families control about half of the banking of the financial. energy is a classic and in honduras it is interesting because it is not a country that has an extractive industry. there is not oil or gas. it has a mining industry, but no oil or gas. quite interestingly, it has been electricity generation that has been captured, including renewables. that was a big surprise. the solar energies tha
sector has been captured at the start. and they're getting sweetheart rates, very high rates. palm oil also for biodiesel. a couple other interesting ones, nonprofit organizations. one of the important revenue streams of course, is international development. and so if you can situate yourself to capture that flow, it's a pretty significant one. and then there's the criminal sector and i don't think i need to belabor that in the case of honduras, but we have a case going on in new york right now. the son of the former president, right, i think it is? >> i wanted to ask you a question. >> of course. >> what makes it an operating system, as opposed to just a bunch of crooked people? >> that is a great question. and it partly, you look at the personal relationships. so in this case, a piece of the
private sector element is somewhat self-contained and it is culturally uniform to some extent. it is a letter people who are defendants of immigrants from the middle east and they tend to live together, intermarry, go to school together, and exchange positions on each other's boards of directors. that self containment is breaking apart a little bit and we are now in the fourth generation, but it is the exchange of personnel and the word.-- what is the yount to say, you know, look at the people who are making decisions and you will see the same name popping up in the decision-making processes in the decision-making body. and as i said, they exchange personnel. he will have this private sector group i am talking about.
they will have had a number of top officials selectively at different stages. and in the criminal sector also, you have got -- you can see, it is almost you have to do social networking. i would have loved to have done enough of these personal linkages, so we would have another graph which would really be the social network diagram. and i think that that is an important avenue for further research on the topic. >> what is the overriding goal of the system? >> making money for network members. it really is revenue maximization. aw, we can get into conversation of whether it is money or power and does money get you power, or does power get you money? generalcase, and in internationally, money is the objective and power is more the means to that than it has been i
n other times or places in human history. the reason i say that in the the money is used to boss people around. and the criminals that have alsos to money are involved around the political people. >> you mean there is no ideological motive? it is really -- >> that is increasingly my view and that is a conversation we can also have about how money other youing know, measures of social value in the period we live in today, around the world. money increasingly is exclusively the way we measure our social standing and therefore, competition among elites is over money. not
over, and, therefore, how you kind of make the money doesn't matter as much. let me just say, so criminal sector is pretty obvious. it's largely a narcotic industry, and then just one last -- two last points i would love to make. >> all right. go ahead. >> one is networks are more resilient than individuals, and i think this is true of honduras but not just of honduras. i mean, you've seen next to in guatemala were some of the individuals committing some of these practices have been removed from office and prosecuted, that that's not enough to really uproot a
network like this. anything all need to think about this as we think about how we interact with this overseas, as those of us who are involved in trying to affect policy toward other countries. but also as we think about the repercussions here at home. networks are, it's like a fishing net, right? you can cut one knot out of the fishing net. that does not destroy the whole net. so that's pretty significant. and, therefore, we really have to think about, and this was important in honduras, was the positive organizations of people fighting against this. we found we are quite networked in we can talk about the further, but they are quite networked. and they are quite holistic in their objectives. they aren't single issue organizations. i think partly because they understand wow, this thing has infected a lot of our public space and we need to, come and the effects are in multiple different domains. >> so i think it's a good time to open it up for questions,
right? >> yes. >> first of all, both sarah and zephyr have agreed to allow me to call them by their first names and so by calling them zephyr and say i am not disrespecting them anyway. just wanted to make that clear. sarah, you've been sitting impatiently. what you make of all the? >> i think there's, what's there is the initial import and want to put in a few different frameworks. one is the framework of the last really 30 years of global, the global anticorruption fight. and anticorruption has drifted to the top of the global agenda. we put lots of money and energy and resource if you anticorruption, but what really matters what we say women in corruption. a few things have happened in that area. one has been very technocratic and there's been a hunch for
infection on an otherwise healthy body politic, then that kind of approach makes sense. but you have this discrete problem in one area and we can fight it by a few laws here and a few more across the issue here. but what they're suggesting is to think about corruption in a fundamentally different way, not by looking at numbers of violations the banks supersede laws, numbers of prosecutions on a particular kind of bribery statute. but rather windows in power -- when those in power use that power for private as opposed to public ends. that totally changes the lens in which we look at things and a white return to that that affects the united states. because then you don't start with asking what kind of behaviors are happening and then behaviors are happening, you know it's corrupt when they're not. you start by asking are those in power using public power for selfish ends or not? and then you start looking at power. one of the important things that said this in this report is not say that we look first at elected officials and then secondarily at those who influence them. because do that assumes elected officials are those in power. you start with the default assumption that those who get elected or, debatable and if government system, on the source or issue. look at the who controls things. and to actually controls things matters. what she is doing then is harkening back to a more aristotelian way of understanding corruption.
as you may recall, or may not, it's ok if you don't, aristotle had a fixed tier system of government. there were three ideal forms, and three corrupted forms. the ideal forms with the monarchs, the aristocracy, and we will call it democracy although at the time democracy had some bad names, and the corrupted forms with the tyrants, the oligarchy, and begin he would call it democracy, mob rule,, yet. what's the difference between these two, the corrupted and non-corrupted font. it's not the number of people governing. it's actually who they serve. the difference between the tyrant in the mark is the monarch is publicly interested in the tyrant is out for his own. so what she is describing in that something closest to the rule by the few who are self interested, the oligarchic rule.
this may sound like everybody understands aristotle, but this not the way we operate internationally now. we tend to operate by looking at particular crimes and trying to stop those particular crimes. i would also say this is real resonance for our current situation in the united states. and we can talk later about the trump administration, which is unique in its assault on the rule of law and unique in its disregard for any norms or laws, not any, but norms and laws around corruption. set aside donald trump, prior to this recent presidency we have a growing split between elites and the rest of the country. especially -- [inaudible] elites. but a split between what we think of as corrupt and not corrupt, and there's an incredible capacity of political elites to understand and rationalize behavior as not
corrupt because it's not illegal. whereas if you talk to most people in most places in the country to look at the way we find campaigns, profoundly corrupt. not just the way business is done but actually leading to those in power serving private instead of public ends. >> i'd like to jump in on that and ask sarah, because one of the boys that zephyr was making is how you can get what you call a plutocracy through legal means, by changing laws, so what used to be a democracy, what used to be a somewhat on the system becomes a dictatorship through legally enacted means. and so what have you seen that
looks like that? and if you could talk a lot of bit about some of the other things you report out each of the private, public sector, the criminal sector, the sector you call enablers. how all of those people are, according to report, working to make this operating system reach its maximization of money. >> so the legal question is a really interesting one, and i'm going to stray from honduras again for a second, but say that one of the things that these network elites, wherever they are, typically use to keep the population down, if you will, is legalism. and, frankly, the u.s. example at my job on the ground was that eight to zero supreme court ruling last july that throughout the corruption conviction of governor mcdonald of virginia, you know, in the area. i could even have swallowed if it had gone that way on a split
ruling. it was the eight to zero part of it that really blew me away, and the fact that nobody even thought to write like a concurring opinion saying golly, ok, given the way the law is written we had to vote this way, but, and a couple of bucks about what those were. but let me just spell out why the conviction was thrown out. it was thrown out not because there was no clear quid pro quo. there was one. it was the definition of what an official act is. so the guy headset that meetings for his business benefactor, right? he had set up meetings maybe even in the governors mansion. he had used you know, public instrument like his telephone and things like that, but an official act was being defined ever more narrowly, that essentially to the point that it seems like for something to be considered corrupt in this country, you almost need to find a contract.
>> except virginia. >> no, no, no. this wasn't the supreme court of the united states. the supreme court of the united states. >> that wasn't the ruling based on the virginia law and what the virginia law was speedy u.s. law, right? >> just to underline what sarah is talking about, we had a supreme court who has narrowed the definition of corruption in two distinct areas. the laws that are prophylactic laws, the laws that make corruption less likely, campaign law, like says -- like citizens united. >> what you mean by prophylactic, like the upstream law, the laws that upstream of an act actually being committed would prevent the series of events that would make corruption likely, so it is like -- >> so in this case is what the court says is we don't need these laws, because we have bribery laws to deal with -- we have real, we'll deal with the real problems else out.
and then in the bribery cases, the court has narrowed the definition of corruption so making it harder for prosecutor to bring cases as in the mcdonald case. so you have this sort of vice coming in annual thing left is basically it's a really bumbling criminals. >> you would have to, you know, armando is in office. don't use me. >> we are going to sign a contract, right? on a going to give you 5000 and -- give you $5,000 and yet about the following three ways and let sign the contract, and then you can have -- >> this never happened. >> but i think that relates to an elite and cultural approach, that the supreme court sees people like governor mcdonald as part of the community that they recognize and understand speedy --
>> a sense of entitlement, do you think? we're entitled to that? >> it's a splitting community that relates to the incredible class we have in this country, and mark twain you can go to for almost anything writes about this in his novel, the gilded age, a few different languages of corruption that happened in the late 19th century where elites start to say hey, this is it really corrupt. this is just the way we do things. anybody else says, you know, if it walks like a duck and talks like a duck, it's a dock. >> so understood is quite clear, the legalization process. the first thing i found really interesting was just to look at the congress building. you have seen it. this thing is clearly devalued. the building is not a dignified building. i almost included in a slideshow picture of the chamber which kind of looked, doesn't look as nice as this room. and that's not because of lack
of resources. it's an issue of the dignity of the body and the institution. its ability to serve and oversight function has been systematically undermined, meaning again, just physically the fate, when i wanted to meet with members of congress, they didn't have offices. they didn't have a conference room. there are two conference rooms in the building of the congress. and actually had to camp out in the building to prevent any, sorry, in the ribs, to prevent anyone else -- in the rooms, from taking our things. >> people might say that's a good thing though. >> i mean, just in terms of how you can conduct your business. ok. but then what we were able to do was catalog just a series of laws that all cut the same way, essentially legalizing in a term, legalizing actresses that
-- legalizing practices that obviously violate any normal -- personsible person's conception of corruption. for example, they could something called the -- the council republic private partnerships essentially. it serves to move public money off budget for quote public-private partnerships on infrastructure projects, that the money is held in a trust by a bank. and is therefore not subject to the public procurement law. so again it's a way of essentially disabling governments ability to perform its function in the public interest. secrecy laws that increase the ability to hide all of these types of practices. i mean, secrecy laws, it's again
under the cover of national security but there are all sorts of bodies that you wouldn't normally think ought to be covered by the national security secrecy law, like the supreme court, for example. all of the proceedings of the supreme court are covered by classification system that you would normally assumed to be controlled by the military. you also have had the creation of a national security council that confuses again a lot of what you would only think of as separation of powers. so you've got the justice sector. you've got the president and the supreme court, the attorney general, and the army, the interior ministry, the president on a national security council that, and then you've got special units of the police reporting directly to that security council, rather than up the normal channels.
so those are some of the types of things. and then along with the bending, so the sort of capture of the justice sector, the legislative sector, you have the hollowing out of other government institutions. and i mentioned, congress kind of describe both of those but environmental, the environment industry. so there is a ministry here but it really is remarkable to see how environmental oversight is, it has been gutted. >> does that sound familiar, sarah? >> absolutely. i mean, i want to be very clear that as somebody who looks at corruption in different countries of the mostly focus -- mostly focused here, but it's always important to be context disinfect and runs that country is very different and that we --
if we start making comparisons. but as an american, there are some things very haunting in what sarah is saying about law. and about hollowing out. so not the same but there's an echo. in the united states we have the growing privatization of law. this is largely done through arbitration agreements that people must enter into an in order to have an employment relationship with big companies. and then there's arbitration agreements who don't have all the protections that you have in a court. the judge is not a judge who is either, to be on, appointed or elected through your public way. the rules of the fuel are different. it's been a bit of revolution really the last decade. it's a move from the public open court to these private course that you agree to. you contracted so it's ok, you
might think, but when you see this mass shift to private courts from public courts, we ought to be very concerned because it's very different. it is not a thuggish takeover but it is nonetheless a took over of an essential feature of a self-governing, open, democratic society to have privatized court systems. you also have a different kind of -- i was fascinated reading a report about the rule of public/private relationships in this corruption, because in our country, we have -- you might've heard about companies that offer for free technology to police departments. you get free body cams and in exchange, those companies get a foothold in both the data and the business stream and then you have an incentive to maximize certain kinds of developments. you also have that in your public schools with google
providing free technology to the schools but in exchange you have a deep entanglement between a company that whatever you think of it, has that core and has to have, as a matter of law and ethics, a profit maximizing motive. it must be self-serving. seeing public private partnerships, there will always be some, you can't have a society without some partnerships but there has been a rash and a move to that and i to get something we should be wary of as a source of the corruption of our overall society. >> where honduras is different or almost an exaggeration of this is we still think about maximizing the self interest in the u.s. business context is shareholder value. it is still, there is a notion that the business has to perform
some function that causes people to buy its product or use of software or whatever it is. it's offering something the market requires whereas what you see, again there's some blurry places, one could argue a lot of processed food in the united states is not actually food. it doesn't serve a lot of public interest but i think there is this white elephant syndrome that's really important to understand and that is you create an infrastructure of big infrastructure development that isn't actually meant to function. hospitals that get built that are properly equipped or aren't assessable to populations because their actual function is
to serve as a pass-through for public funding going into private pockets. that is the way, for example, the solar energy in honduras, it's terrific there's solar energy and i certainly think i'd prefer a green kleptocracy to an oil drenched kleptocracy but you have this generation where the contract with the state's 20 30 years long and a price is locked in at the beginning of the contract and that price is 20% -- i'm sorry, 10% above market value plus a 3-cent. kilowatt hour bonus for the first number projects. you are talking about locking in on inflated price for electricity for the next 20 30 years at a time when the cost
-- next 20 to 30 years at a time when the cost of solar energy is going down 10% a year. that is no longer even shareholder value as we can understand it. that's called looting. in this case it's looting the customers because it's going to be paid in rates but it's also looting the state in other cases, banks, anyway, there is this great corruption joe, you may have heard it if you hang out in a lot of corruption circles. >> there is a great corruption jokes. you may have heard it. one new young kleptocratic is visiting his cousin in another country and he sees this incredible mansion. the kleptocrat shows him around. he's got great pool in the back and a great view and he said how
did you do this? how did you make this and the old guy points out the window and says see that bridge, 30% . and ten years later the old guy is visiting his cousin and his country and he cannot believe the castle. he has three pools and an incredible layout. he said i know i taught you, but how did you do that -- do that? and the young kleptocrat points out the window and he says you see that bridge and the old guy said no. [laughter] so there's different stages. >> let me just add another element which is sometimes private businesses can actually serve as white elephants, in a way. -- kabulxample, coble
bank in afghanistan was paying a salary to the afghan army. the thing was a ponzi scheme. it was insolvent, but what kept it afloat was the cash flow going through it. you can keep thinking about real estate serving the same function, or in honduras, the bank which is the biggest bank in the country bought out citigroup central american holdings. now, i can understand why citi would want to get out of central america, given what kind of money is sloshing around and giving the ratcheting up of banking compliance that's been happening in recent years. if i were citi, i would d risk i would de-risk in that particular way, but my question is did anybody look at what money bought them out. i had a conversation with
someone from a development bank who said, essentially the entire banking sector in honduras looks like the banking sector in afghanistan but the only ones that were actually solvent were the ones that were running opium money. it was the same kind of flow, it's just that was drug money keeping them afloat. and so, the assessment is that's kind of what the banking sector looks like in honduras, but it's so systemic it's almost a too big to fail. this guy is doing economic analysis for a big international development bank, and i asked him, how are you factoring in the dirty money, how are you dealing, in your economic forecast? and his answer was i'm not because you can't measure it it.
you can't measure the dirty set -- the dirty stuff. you don't know how much is sloshing around. i thought so what meaning does your analysis actually have. it's not an analysis of an economy that actually exists. if the understanding is that every single honduras bank functions as a white elephant, they are providing services to people, but their bottom line is completely detached from the services they are providing, how do you, that helps explain some of the reluctance we all have, not just in figuring out how to deal with a system like this, but even acknowledging a system is like this because then it's like the whole country is too big to fail. if we start pulling one of these strings, we will pull the whole country down. >> let me ask you about that because one of the other groups, you talk about enablers and
organizations that enable some of this corruption to continue. in the case of honduras, one of the things you've been talking about has been the drug money and the cartels that are using honduras as a transshipment point, but there's also a lot of money destined to go to central america from the united states to fight these cartels, to fight the violence and yet you seem to look at this as another revenue stream that the operating stream wants to capture. how do you see that? especially in a country like honduras. this after deep experience in afghanistan, i know a lot of communities here are very concerned aboutmilitary -- concerned about military assistance to honduras. when i look at the numbers i think it's kind of a drop in the
bucket of what i've seen, but in this context it has a very significant impact and it boasts of military assistance and there's a kind of moral impact or psychological impact that it has. i love the way you from that question because it raises a political trade-off that is often applied to these types of situations, and it's one of the things that these networks least often used to distract from what they're doing. they will say, but if not for me, the security situation, they always often use the security situation as a counterbalance. the heads of these networks will often pose as the people who can help you handle the security
situation whether it's drugs or insurgent violence. >> undocumented immigration. >> exactly so i feel president hernandez has situated himself effectively. he's done it by indeed cracking down on some of the drug trafficking, and everyone that we talk to did say there has been some progress on the drug trafficking problem and the drug violence and i could experience it in places we visited were locals were saying two years ago we couldn't have driven down the street. >> how much of that is what you have seen in other countries where the cartels themselves understand that if we are about making money, let's not kill ourselves, let's make money. let's keep a lower profile and maybe have a few sacrificial lambs to the cartel and the cops so we can continue.
>> it's a great question and i have to confess, i wasn't looking at that specifically so i can't make an argument about how much the cartels themselves were self policing, but i do think hernandez was policing in order to throw a bone to uncle sam and get himself in good light with the u.s. government by saying, i'm helping you with your issue. the united states tends to be a little single issue and we get focused on one thing and in the case of honduras it is the migrant flow. so the other thing we found is a massive increase in incarceration. just dramatic. we didn't even find it. a lot of localized support, people in neighborhoods saying they would see sweeps in the night.
so that is one thing i think is really important to think about, very often, in my view it is this type of networking of the public space, the political economy that drives people toward violent reaction, the insurgency in a place like afghanistan or isis or be at gang violence. people start setting up almost their own social structures encounter distinction to governing system like this or they will lash out at it in extremely extreme ways and that can be violent or revolution or insurgencies of one kind or another, it can be voting and yet these people, they are
really good at persuading outsiders that they are the champion against the very violence that they are practicing are fueling and driving. >> and some of those countries, people that own the security companies are themselves members of congress and part of it. >> bingo so they are making money off the security situation. >> that is a great point which raises another point about one of the instruments that they always have and they almost, so it will be a particular battalion in the army or particular unit in the police or something, and there's a lot of that in honduras where hernandez is creating special units that report directly to him, but they also love to have informal
instruments and those can be the gangs. so you start seeing gangs but supposedly this government is fighting against and there also instrumentalizing as a plausibly deniable, and internet trolls in this country, you can almost think of them in a similar way. i'm sorry i'm not short answer kind of gal. >> i don't even remember the question. >> i think too often, or i can move away from the obvious issues, too often when you look corruption. here who any people
usaid?er worked for often they get the united states government gets offloaded and then they have to develop some anti- corrupt programming and internally development agencies, when they think about corruption they tend to think about corruption within their programming, meaning "is any of our money getting stolen?" [inaudible] we look in particular at development nine which is development banks or in the case of the international finance corporation, or fmo is another important one in honduras which is the dutch development bank, but i decided
to pick on finland. they'refinland, helpless. >> i know and i love the space and i feel so terrible because i really love finland and i really think it's a wonderful country, but they do have a development bank and it was fascinating to look and it was one of the investors in a now very famous and tragic project. it was a dam over which he was assassinated. but, how it works, the finished government puts -- the finnish bank puts money into a bank and it once return on its investment but wanted to go to the development of justice. what i found was that they will put money directly into projects
or sometimes usid will put money into a fund at every layer in this process the development objectives, the oversight is weaker, the guidelines are more general and less specific, and the oversight is at every stage along the way, what we found was, when i would say what reporting requirements do you have, they would say we could report every six months and then i would say do you ever check the report against the situation on the ground. so i hear a warm laugh up here, and i was really stunned at the degree to which the presumption was that there doing good, whereas, at the end the official kinda turned to me and said quite passionately, i just want
these people to have power. my grandmother didn't have electricity and the biggest event in her life was getting electricity. i think they really felt strongly about that, but when he didn't go down and look at was is this electricity actually reaching the people, or is the electricity a profit-making venture that's for exports which turned out to be the case, and the presumption, and the other thing that was really interesting was they felt attacked by the civil society organizations that were protesting so when i asked, is there anything you do differently, a a woman of tremendous community leader, a breathtaking organizer and activist, if you will, i kind of
feel like she was hondura's nelson mandela, when i went there and really understood the kind of action she had had and the kind of impact she had had, way outside of her own ethnic group or whatever it was. asked, would you do anything differently, they saw her organization as an enemy and they said yes, we know it's not enough to have a good project, you really need to understand the context within which the project is being developed. i was like "yay," until i hear the next sentence which was you have to know, is there an ngo out there that has a lot of international support that will
blow up in your face so that was was. and i was like how did they get into a position where the very people they claim they are trying to support which is local villagers who want electricity, how did that organization become the enemy rather than the type of communities are trying to support. and what was your answer. >> and what was your answer? >> i think what this goes to is that corruption isn't the side thing, it's deeply intertwined with government. you look at the founding of our own country, at the constitutional convention they talked about corruption more than they talked about anything else, not because, they talked about corruption more than they talked about violence, internal insurgency, the problematic people in massachusetts, more than warfare because they saw the fundamental task of figuring out a system of freedom is freedom from an inevitable pressure whether you are in a monarchy, single view
or multi- rule, it's the reverse of the arc of justice towards history. the arc of government bends toward taking, and so it's a second-level task and so questions of government, who decides, who makes decisions solarwhether it's can't be separated from questions of corruption. you actually have to engage in all of those together. >> i'm sorry, we were just talking about housekeeping. >> he wants to turn to you guys and i was like let me have one more word here which really connects to something else i heard from villagers in honduras. he said you know, we have started to understand that this political party thing, this democratic contest between
political parties is really just designed to split us up amongst ourselves, and if i were to kind of translate what they said to me into my vocabulary, they are seeing the political party contest as really been a contest among or between rival strands of an imperfectly integrated kleptocratic network. i mean, the network in honduras is not a single network the way it is in azerbaijan. it basically manifest themselves in the political party system, and i would like to do the u.s. parallel and say i think that is have of the malaise we 60% of thelot of why
electorate doesn't vote. and it's quite interesting that we are focused on polarization and political party polarization, and i think we are polarized on social and cultural issues, but as they suggested in the beginning, at the top of our party system, there is much more consonance than, or members or supporters of either political party would like to admit in terms of these types of political economy issues. there is much more similarity at the top of the democratic and republican parties that is not really expressed in the polarization down at the bottom and so to some extent, the identity polarization becomes a distraction, preventing the people from holding those guys at the top who are kind of colluding and holding them responsible. >> i can say, this affects people report.
in the last six or seven years, things were bad before that, but since citizen united in congressional contested races -- i was in the race last year, -- in the hudson valley in new york, the majority of money spent is not from either political party, but from outside super pacs. it still reported on by journalists because there's a potential alignment with the republican side that this is a republican super packer democratic super pack, but what it means in fact is that the main contact is happening now with the candidates and not with the parties and not with their ideology, but with extremely wealthy donors on each side.
i'm talking $400,000 to $500,000 donations and that's just in the seven years since it's been citizens united. i think people are not stupid and they feel that the contests are contest between elites and that leads to a lot of things. it leads to disaffection and i think it's part of the story and a true tragedy of the trump election that he is probably the most corrupt president that we've had, and i use that term not in a legalistic sense but in the sense of being willing to use the office for making money for himself and for his family, but i also think many people voted for him because they were so frustrated with what they saw that they just wanted something to change. i spoke to a trump folder the day after who said i just wanted to put a wrecking ball. >> so the tragedy is people voted in part, there's a lot of other things going on, but in part as an anticorruption moment and i think were still in a revolutionary moment, people
feel like they want fundamental change both for our country and in terms of the aid we may or not provide. i think that really matters. we spent 30 years after the wall came down trying to tell everybody to get on with this democracy program. we have a special responsibility to make sure we clean our own house, deal with our own structural problems of corruption that are not just wound up in the illegality that we see with the trump administration but structural problems about how we fund campaigns and how we privatize and allow corporate power right here if we want to continue the spirit of freedom and shared -- share that around the world. >> because we do believe people are smart, we are going to let you show how smart you are by asking questions. we have facilitators on both sides of the room.
please raise your hand and someone will come with a microphone and we ask you to keep your questions brief and carnegiet is the endowment for international peace, try to keep your questions peaceful. >> ok we have a question up front. >> would you not agree that the founders of our country devised a process of governments which recommended a separation between the policy and the elite, did they make a mistake. >> could i ask you to, are you affiliated with someone please let us know. >> i am a physician who directed a program in russia. 70 years.care for
>> thank you for your question. let me see if i understand it. are you suggesting there was a mistake in not having a direct democracy as opposed to a representative democracy. >> electoral college is an example. but i think there are others, by the writings of the founding fathers. >> so, by no time no means i think the founding fathers were perfect, there are some obvious errors, i'm a langston hughes pham, let america be america again and america was a never america to me recognizing the past and that there are flaws. i would say the spirit, the anticorruption spirit is something we should continue. when designing the congress and the senate, one of the reasons they had a separate senate and congress was to contain different corrupting impulses
that we have. those of the elite and that is what they saw as the more unruly democracy. hamilton argued for an executive on anticorruption ground thing -- saying the executive is the least likely to try to use his position of power because he will identify with the country and he won't steal from it. to which mason and others replied look at the time that charles took money from the king of france and was bribed in various ways. we need to have things like the emoluments clause to protect against an executive who is self-dealing. actually the electoral college which is now outdated was initially designed as an anticorruption tool because it was seen as too difficult, given the shape of the road to corrupt every different electorate if we had all the votes on the same day in a structured way.
i don't think we should stick with exactly the documents, i believe in the importance of amending and moving forward, but i think this kind of attention, every detail, and not just who are we going to prosecute but we think of the structural job of building a democracy. question. >> my question is, i was just pentagon if the could play a role in reducing the
-- it'srnible] reducing the temptation. these pakistani by billions of dollars that fund them to make millions and kickbacks. >> i am not going to get into internal pakistani politics but the issue of how military assistance can play a role in this type of a situation is an important one and i have a fair amount of experience with it in afghanistan, not pakistan. what i have found is the us military in general is quite ready to engage in this territory at all. at a senior level, when i was involved, senior officers got it and they did understand that the integrity of government was critical to them and succeeding in their own mission. i know a
number of senior officers who really waited in to the importance of anticorruption as part of the policy toward whatever country it might be, in this particular case it was afghanistan but could that can stand or act congress. on a lower level the military is extremely reluctant to have this enter into, officers that i have known -- and the departmental and military department and department of state is reluctant to see this as part of its job because essentially they see their job as, "we're there to shoot."ople how to i think that's a mistake. i think the integrity of armed forces is absolutely critical to
these issues everywhere and the us role in training, mentoring and equipping military in honduras, pakistan, variety of other places is a really excellent environment in which to drive home some of these lessons. for example, i talked somethingwho know about south korea, which i don't. they say the gradual emergence of south korea from and now is not a time to say especially with what is happening now but south korea used to be extremely corrupt and emerged out of it. people said that's partly because of the example that was set by us forces when they were there. >> let me ask you, what is the role of us military aid in pacifying generals and that
network being able to keep the generals at bay by using us money to say, look, were getting you your piece of the pie, behave. >> i think that's a great point. it is often used as a bargaining chip, in a way. it's pretty amazing that the united states prosecutes businesses for bribing foreign officials, it's called the foreign corrupt practices act while the united states sometimes seems to bribe foreign officials. >> we've also had some admirals recently -- >> indeed. >> question in the back. question in the back, raise your hand. we'll take two questions in the back. >> there is one all the way at the very back. >> rick messick, i am with global anticorruption blog. my question is we spent an hour hearing about how terrible the
situation is in honduras, can we spent a couple minutes on what you think might be done and in your comment could you talk to this oas commission. recently established. yes. with zephyr. toolkits. favor of that's part of why i'm promoting it doesn't have to be this diagram but to understand how to address a .dot country you need to know something specific about how it's network are structured. i think there's about 60 countries in the world, or maybe more, that you can roughly describe in the way that i described honduras. you do need to note specifics about how it's set up. there's a real, as i said, networks are resilient and you can't just hope to knock off a
couple of individuals. i would like to talk about two elements. one is the one you mentioned. which is a kind of version of 2.1 of the commission that has now brought down and prosecuted several top members of the guatemalan government next door. there were broad protests inon foruras, they were asking an internationally supported commission with investigators or
prosecutorial mandates which is made up of a combination of the guatemalan and international justice sector professionals. it's extremely powerful tool and you can that the honduran government wants what they sought to happen next door and they said no. >> el salvador also didn't want. >> of course, nor did next. most of latin america is clamoring for a ceasing. it's different but in different ways. it lacks the independent prosecutorial mandate that ceasing has but it does have an expanded mandate to address some of the i want to say institutional structural set up that allowed the system to perpetuate itself. that's a real potential upside. they are looking at campaign financing laws and they are looking at plea-bargaining laws and corporate law and some of the really important legal framework that allowed the system to perpetuate itself, there will be a dramatic pushback. it already has been and i
haven't followed all the details of it but that's something that's worth following. for example, in the honduran congress there is a front in support of moxie. it's a multiparty, nonpartisan front. there are efforts to disable that front that are underway at the moment. precisely because of the danger it poses to the structural framework that allows all of this to go forward. that's one thing. >> but if moxie doesn't really have any teeth then isn't it just a distraction because the one that really has teeth is the one no one's talking about. which is the cc. in other words, if you can't do what was done in guatemala then essentially, it's just a shell game.
>> i'm not sure that's the case. what was done in guatemala was an individual's for profiteering. however, for the moment, the network survives. the network can survive the removal of individual. ceasing does not have the mandate to address the framework, the structural elements that allow the network to prosper. i think, frankly, the jury is out. the jury is out. let's watch and see how it evolves and see whether he can grow some teeth. there are some pretty dedicated people there which will not allow themselves to be none of the people will be a windowdressing. most of them are not there, pretty ferocious people. let's also see, is moxie able to convert it's, you know, institutional mandate into something. i just want to talk about something else in terms of a positive. which is the organizations that
are fighting back. t hese movements that are often described as environmental movements or indigenous rights activists or land activists and so they're often in the description of them broken up into the little categories and, you know, they treated these organizations as an enemy. rather than seen these organizations have a bead on this system in a very sophisticated way and they're trying to network themselves. for example, one of the. [inaudible] which is the constellation of. [inaudible] the head of it or coordinator of it was on his way to columbia when he was about to meet a whole bunch of representatives from other indigenous movements across the region to discuss the problem of
monsanto. which is trying to patent, you know, seeds. they are saying we invented potatoes, you're not going to tell us that you guys can patent, central america that's where they come from. they're working hard to revise indigenous varieties of plants. they can all tell me they go by their farms and say this leaf is a fertilizer and the bark of the century is an insecticide. they're completely educating themselves or reeducating themselves on those types of luer that is also part of their struggle. it's interesting, finn fund was saying this other larger group they have a quote other agenda is not about the seed. what finn fund did not understand was they know that the dam is part of the structure network system and therefore they have to address it in a structured network way.
>> those organizations are doing this at a tremendous personal risk to the activists families. they get murdered and disappear. this is not a joke. it's not. >> that's right. i even want to say, even though i'm not an expert in this, there has been successful anticorruption efforts over time. it's not a single direction. it's almost always involves an incredible amount of civic engagement in this country you are in bad shape in 1899 and took us several decades but a lot of different efforts and my hesitancy about using toolkit modeling is if you think of a background image of a car that works any car that doesn't work then you get a toolkit to fix the car that doesn't work to make it a car that works and then will continue working. i think we need to understand is we can learn from different circumstances and experiments. that learning never stops. there is no steady state utopian, stable, non- corrupting world.
new methods will come around in which corruption gets in the new way. for example, it's important because i believe one of the greatest global corruption threat comes from modern note multinationals who engage in different countries in different ways but again how the mandate to maximize profit. we don't accuse him of that. that leads to figuring out how to not just not get caught like uber might but how to take over the laws to maximize profit. i'm going to continue with a founder story but thomas jefferson was very worried about the corrupting power of monopolies. you can certainly call monsanto one of the controlling 80% of the seeds and corn and soy in this country and other countries because he saw them as many private governments that were
essentially corrupt. now that there outside government but that they govern themselves. they govern behavior and one strategy that i would think about in any country is anti- monopoly as a potential strategy to take on a concentration of power because that concentration of power enables the networks to extract a value in society. >> that's interesting. if you read any futurist some of them go as far as writing that in the long run there will no longer be government, there will be corporations. they will act as governments. if you read anybody, science fiction writers, that certainly one the theme of their writing. the downfall of governments and the rise of governments. question in the back.
>> adam khan, google. but i'm not representing them here today. i highly recommend to buy a copy of dark money. it paints an amazing picture of the corrupting influence of money and corporations and how elections are bought. coming back to that idea of concentration of power, gerrymandering, super pacs what do you see as the future, will be stuck with the citizens united? named.hemistically why don't we talk about the power of super pacs and how we are in the situation because of the citizens united? >> great question. citizens united is not about to be overturned which means we in the united states, it can be overturned but it's not about to in the next few years given the state of the supreme court. it's important to be realistic about that. it means that more is required of us.
if you think of this as a kind of battlefield, we just lost a lot in the last seven years and they have transformed politics. i talked to you about my race but basically a super pacs played checkers in the first year and they're playing now and they're about to play go. they're deeply involved in data. super pacs are increasingly doing that canvassing that parties used to do which is very quick takeovers of our political system. i believe and sorry to say this to you, adam but one of the things we have to do is take on, is a we've changed the way the campaigns are funded. and model that for other systems. in new york city, it's transformed new york city politics led to a lot more competitive races, fewer and comments, and then we also need to bring about anti- enough
anti-monopoly laws. i would say that google and facebook have enormous political power and that political power i felt in my own race. not only is filters for news and information but also in terms of the deep political connections to the political parties. we talk about law and nonenforcement and google was deeply embedded in the obama administration and many people look at that is that's why the obama ministration did not take on the wage-fixing scandal in silicon valley where the basically the big five agreed not to hire and poach each other's workers. we have to look not only in the in-flight company but the come where there's concentration of power. >> questions, upfront, please.
>> i'm with the oecd. i have a question for each of you. i'm glad you explains a little more about your view of the toolbox. i think toolboxes with perfection work or can work in terms of trying to deal with this issue over the long-term. my question is the situation -- one of you mentioned electricity and instead of going to the people and ends up being ripped off or whatever and my concern, i think our concern, or when the people get just enough on the electricity but there's still a ripoff. my question is which goes back to the question that might have been raised earlier is what do
you see the enforcement mechanism? what you see in the toolbox that potentially needs to be improved or to work? i'm putting aside our own issues with this particular government. that's one for you. >> we are almost out of time. we only give you one question. it's 5:20. >> that's ok. answer if you can. i'll get there. walk, zephyr's got to out at 5:30.
ok.hat's you made an interesting point that this can relate to a country. one of the prime examples we are now with our third president is being looked at and perhaps in my question to you is how do you move from being the poster child for the good stuff showing that we are strong and the possibility that it can basically be undermined and basically have a loss of faith in government and no government that can operate? >> so, briefly. in this country, we need i said some of this before we need to change how we fund elections. or overturning citizens united is incredibly important. actually enforcing antitrust laws which we haven't since 1981. but then also introducing new antitrust laws to deal with the new monopolists who are taking
over and corrupting a lot of our government. some parts of that in this country are these questions about the incentives in our prosecutorial offices about why doj and ftc have been inactive and i use them as one example in antitrust. why other agencies have been inactive in taking big banks on. i think there's different ways that we can structure prosecutorial offices, incentives inasmuch as a prosecution is one part of what we should be doing. the last thing which is not a law is cultural. it's actually expecting and insisting, as a cultural matter, not as a law matter regarding as aving doors, but
cultural matter, that people serve in the public good and not in their own private interest. not merely when they're holding office but after they have held office. i used to play games and i'll take it over, what would oleg do oligarch going to setting the corruption if in different countries he would craft everybody everbody differently. some countries he would know big contract and in the united states he hired bob dole as a lobbyist. that shows us where our weaknesses are. it's a different strategy using different countries. we have a
real weakness and accommodation between lobbying and company finance and super pacs in our own cultural acceptance thereof. >> i'd like to add to that regulation. i hate to say it and it is true that, you know, if you're a small business or small bank there's a lot of protecting paperwork that strangles you but what is interesting is people working on behalf of some very large, self interested private interests are using the travails of the little guy as a pretext to dismantle regulations on them that really are in the public interest. so i recommend to everyone the book, the best way to rob a bank is to own one. it's about the savings and loan crisis and it is fascinating about the role of effective regulators. "the best way to rob a bank is to own one." on my question i would say that the stories you're referring to reinforce the importance of what effort has been talking about. i can't even say the word, prophylactic? it's the word about laws that help to prevent upstream of its taking place and similarly, once you get to the point where it
takes a year of public demonstration to get to even think about something you'll be in a catastrophic failure. it will happen. for example, mubarek looked like a stable, is delivering on the campaign just like we want is a strongman and stability and, if he's a little krups is a little corrupter on the edges and that we can live with that in return for stability. but you'll get some kind of systemic failure in that case. unfortunately, what happened in the case of egypt is one branch of the network came back over.
now we have sisi, which is the same thing and fact and worse. now were saying wow isn't this great we've got stability, we've got this strongman government in egypt but it's not going to last. there will be systemic failures. the point is too big to fail actually fails. it does fail in the end. as it did in 2008 in the banking sector. the real question is how do you then put in place a framework that will avoid getting systemic risks again and we haven't gotten there yet in the us banking center and corruption in foreign countries let alone our own. >> i'm afraid i will be it for the questions. i like to give both zephyr and sarah an opportunity for some closing remarks. it's been a wide range of discussion all over the map, literally. many levels of sophistication from countries like honduras, united states, different levels of corrupt activity but all of them, in many ways, showing that if you can fix something in a country where the level of corruption is here doesn't mean you're out of the woods.
when you get to be a first world country there will be corruption issues there as well. things.briefly, three decentralized private powers is essential to protecting against corruption. the second and i sound old-fashioned but that's my job. we have to engage in the things of virtue and morality and not merely see it as a democratic technocratic matter. we should definitely read sarah's book. [laughter] >> i would like to emphasize the point that we didn't touch on and that is insufficiently -- let me touch on two points we didn't. one is, you were covering the kids coming across the border and are still coming across the border, what i heard mostly was they were subject to gang violence and gang extortion.
that's probably what you found and that's what they talked about. it took me about two days on the ground to realize that the police were outsourcing their extortions again. i don't want to be the guy with a hammer and a nail but believe me, you scratched the surface on just about any problem and you find corruption underneath it. just be aware that this whole system was very instrumental in moving those kids onto the perilous roads that they took. >> and to add each one of those children represent thousands of dollars for the smuggling network to bring from here. when you multiply hundreds, 200,000 children and family units that have come to this country over the last few years and you multiply that by four or $5000 that is perhaps not paid
out at the beginning but is paid out now by those families sending money back there is a huge flow of money because of the smuggling that is happening in central america. >> in just to reinforce what armando said before the very government that we are relying on to stop these migration flows -- this is true of corruption in general, when you say not worry about, let's back burner the corruption issues because we really care about this concern, more often than not, it's corruption itself that is driving this concern over here so it's actually counterproductive in the long term to back burner corruption in order to focus. the second point i want to make is insufficiently developed in this report and i want to turn to it much more in future work but these networks, although it's important to look at the country's distinction, the networks themselves are not
isolated within their country. these are transnational kleptocratic networks. were all used to train national organized crime, were used to multinational corporations but it stands to reason that if the networks are integrated in these ways the kleptocratic are transnational. we ought to be taking a look at that as we examine our current situation in the united states where we have a tendency to look again for specific instances of conflicts of interest or specific laws that may be violated whereas if you look at the pattern of the business or other interactions by key members of this administration overseas, it almost looks like an airline route map where you've got different countries but the lines are going like
this. i think were looking at washington becoming or having become a node in a web of kleptocracy. >> carnegie endowment for international peace and professor of law at university a lot. thank you for this very, very interesting discussion. thank you for joining us on c-span two. i'm armando, good night. [inaudible conversations] ♪ c-span's washington journal, live everyday news and policy issues that affect you. this morning, talking about the proposal that would allow kerry
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